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Rise in mortgage payment difficulties, but numbers still low
Feb 3 2006
The number of properties taken into possession by mortgage lenders rose to
5,630 in the second half of 2005, according to figures released today by the
Council of Mortgage Lenders. This was 22% higher than the 4,620 in the first
half of the year, but still extremely low by historical standards - the peak
half-yearly figure was 38,930 in the second half of 1991.
The total number of repossessions in 2005 was 10,250. This was 70% higher
than in 2004 - although still the third lowest annual figure since 1983.
The number of mortgages in arrears of 3-6 months rose to 59,700 - up 3%
compared with the end of the first half of the year, and up 11% on the end
of 2004.
The number of 6-12 month arrears cases rose to 32,470 - 3% higher than in
the first half of the year, and 21% higher than at the end of 2004.
The number of mortgages more than 12 months in arrears rose to 13,820 - 10%
higher than in the first half of the year, and 23% higher than at the end of
2004.
Although any rise in payment difficulties is unwelcome, the rise in
possessions is in line with the Council of Mortgage Lenders forecast of
10,000 in 2005. The Council of Mortgage Lenders is forecasting possessions
of 12,000 in both 2006 and 2007. The rise in arrears is also in line with
Council of Mortgage Lenders forecasts. At 106,000, the total number of
mortgages in arrears of more than three months was just under the Council of
Mortgage Lenders forecast of 110,000. The Council of Mortgage Lenders
forecasts a rise in arrears cases to 120,000 in 2006 and 2007.
The Council of Mortgage Lenders is currently actively reviewing the mortgage
payment protection insurance "baseline", which sets out the minimum
level of cover that Mortgage Payment Protection Insurance should provide.
Insurance remains an important strand of protection against arrears and
possessions. With around 9 out of 10 Mortgage Payment Protection Insurance
claims met in full, there is a very clear level of protection available
against the risk of lost income (consistently cited by four out of five
borrowers in arrears as the cause of their difficulties).
Commenting on the figures, Council of Mortgage Lenders Director General
Michael Coogan said:
"As expected, arrears and possessions are increasing from what was a
phenomenally low trough. Although the scale of increase is notable, the
absolute numbers are still extremely small, and set to remain so.
"Now would be a good time for borrowers to review their financial
commitments. Cutting unnecessary spending, ensuring you have a suitable
mortgage deal, and taking out suitable insurance such as mortgage payment
protection insurance could make the difference between coping and falling
into trouble."
The Council of Mortgage Lenders' members are banks, building societies and
other lenders who together undertake around 98% of all residential lending
in the UK. There are 11.6 million mortgages in the UK, with loans worth
around £943 billion.
